Best Practices to Improve Your Employee Time Management

"Time is more valuable than money. You can get more money, but you cannot get more time." 

~Jim Rohn, American Speaker and Author

In a professional services business, the expression “time is money” is truly accurate. Your employees’ time is the greatest asset your business has. It needs to be managed with great care, as if each hour of their time is a valuable piece of inventory. Certainly, if you were selling diamonds for a living, you would build a secure storage facility, get armed guards, and buy insurance to protect this valuable asset.

However, most firms do not protect their greatest asset—employee time—with this level of care. Employee time is often the most ignored asset in the company. Employees are notorious for complaining about having to do timesheets and often look at it as a cumbersome requirement. I regularly hear that firm principals, even ones who are highly billable, are the biggest violators of the firm policies, and cause the accounting department extra work and little support in trying to get employees to submit timesheets on time.

Employee Time Management is Critical to Your Business Performance

The reason that timesheets are so critical to your business performance and employee time management processes is that they pervade almost every single facet of the business.

Timesheets affect all of these areas:

• Project profitability and reporting

• Billing

• Payroll

• Financial statements

• Overhead rate calculation and allocation

• HR (benefit accruals)

• Utilization reporting

• Revenue recognition

• Project management effectiveness

• Scheduling

• Employee performance analysis and compensation

• Project Scope control and ability to bill for work outside the scope (extra services)

• Government contract compliance and reporting

• Client satisfaction and trust in your billing and reporting capabilities

As you can see from this list, timesheets affect many critical aspects of the business. Tightening up loose processes and enforcement of better policies will have a profound effect on the entire firm including:

• Reduction of corrections during the billing process, which will shorten the billing and cash receipt cycle

• Reduction of budget overruns

• Increased project profit margins due to better resource management and billing of extra services

• Better business decisions due to improved project reporting and analysis

• Improved bidding and estimating due to more accurate historical data

• Improved employee performance reporting

• Better HR management

• Compliance with government contract requirements

Employee Timesheet Management Best Practices

How can you do a better job to enforce timesheet policies and ensure that timesheet entries are more accurate? Below are some best practices that I have learned over the last 26 years that have been successful for many of our clients. In evaluating your current processes, you can develop better methods for implementing timesheet policies, enforcing these policies, and controlling and improving employee behavior.

• Develop a documented timesheet entry, editing, and submission policy.

• Teach employees how critical timesheets are to the entire profitability of the firm.

• Provide user training on timesheet entry for everyone. 

• Train supervisors and PMs on timesheet approval processes.

• Implement line item time approval. Timesheet line item approval allows the PMs to approve time by project rather than by employee timesheet. This is a much easier way for them to see all charges by all employees to a single project, and reject individual time charges for correction or transfer to another project or phase.

• Configure the timesheet to automatically come up in the morning when the employee turns on their computer.

• Utilize a mobile application for timesheet entry.

• Require daily time entry and enforce timesheet policies. This is my number-one recommendation for effective time management. Regular daily time entry can make a major difference by improving timesheet accuracy, billing accuracy, and cash flow. If a professional services firm can do only one thing to improve business profitability, I would urge them to require electronic daily time entry by all employees.

• Submit and approve timesheets weekly. Weekly time approval will force PMs to look at what employees are doing more often, and will alert them to problems and scope creep on a timelier basis.

• Limit the number of choices employees have on their timesheet. By reducing the number of choices, employees selections are likely to be more accurate.

• Restrict employees from charging to projects that they are not allowed to charge to. 

• Inactivate phases/tasks under the project when they are completed. This keeps people from continuing to charge to them. If possible, limit them to having access to one or two phases at a time. This will help increase accuracy and potentially capture extra services by alerting the employee to out-of-scope issues.

• Require PMs to budget projects at the phase/task and employee levels. In order for a PM to determine if an employee is on track with a project plan, he or she needs to budget at the lowest level of the project to which the employee will charge his or her time.  A good project planning system will have the capability to send instant timesheet alerts if an employee is exceeding the budgeted hours, or charging to a phase or task to which they are not assigned.

• Integrate project resource assignments with timesheets. If your system allows, provide project plan data within the timesheet to show employees where they are assigned while they are filling out their timesheet. Some systems will even allow you to have the project plan populate the project/phase/task data on the timesheet, which will further improve accuracy.

• Implement workflows and alerts. If possible, have your system warn PMs about project overruns, employees charging to the wrong projects phases and tasks, or charging too many hours to a specific activity.

• Alert employees when timesheets are due to be submitted. Also, send alerts when employees do not fill out or submit their timesheets on time.

• Implement an incentive for submitting timesheets on time OR make employee’s bonuses and/or other incentives dependent on strict adherence to company policies. I have seen this work very effectively. One firm I worked with saw their timesheet violations reduced to almost zero by promising to reduce an employee’s bonus by $100 for each day they do not fill out their timesheet on time. While this can be difficult to monitor and may be seen as an overly oppressive consequence for timesheet non-compliance, it may be necessary in firms where strict compliance is required by law, such as with government contracts, or where timesheets policies are frequently violated and nothing else seems to work.

• Designate a person to check timesheets daily. While this is not an enviable job to have, it does have an effect on obtaining the desired results.

Every Minute Counts

For a labor-based organization, every minute counts. Once time is gone, you cannot get it back. How many of you can remember what you did yesterday in 10- or 15-minute increments? (I can’t!) Time is inaccurately recorded or wasted with excessive meetings and poor management of the contract scope, or by allowing employees to record time incorrectly because they are filling timesheets out weekly, bi-weekly, or even worse, monthly.

In addition to the losses from unrecorded or inaccurate recording of time, other critical business management issues are at stake. Timesheet accuracy affects billing accuracy and cash management. It can also have a profound impact on the viability of the company as a whole if you are a government contractor and subject to a Defense Contract Audit Agency (DCAA) or Federal Acquisition Regulations (FAR) audit.

Executive Influence

I also believe it is critical that the firm’s leaders are frequently communicating to the staff about the importance of complying with timesheet (and other company) policies. If the employees notice that the firm executives are not concerned with timesheets, they won’t be either.

Consider Your Firm’s Culture as You Implement these Best Practices

I share these time management best practices with our clients regularly, and I often get the response that this seems like an impossible process to implement. The firm’s culture and unwillingness to enforce company procedures is one of the major reasons that our clients continue to suffer with inaccurate timesheets, lost extra services, as well as slow and incorrect client billings. This is actually the easiest and most cost-effective change you can make immediately which I promise will produce instant positive and measurable results.

By developing, implementing, and enforcing effective timesheet management processes, you are taking a major first step toward finding the lost dollars that are slipping away every day right in front of your eyes.

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